Wenger v. Taylor

Opinion by Clogston, C.: The correctness of the amount found due the plaintiff below is not questioned, the only controversy being the rate of interest allowed by the court thereon. Plaintiff in error contends that the rate of interest fixed by statute on all contracts not in writing is 7 per cent., while the defendant in error contends that all contracts for interest, either verbal or in writing, may be enforced at a rate not to exceed 12 per cent. We incline to the former view. This question must be determined by a construction of the statute on interest. Section 1 is as follows: “ Creditors shall be allowed to receive interest at the rate of seven per cent, per annum, when no other rate of interest is agreed upon, for any money after it becomes due,” etc. Section 2 is as follows: “ The parties to any bond, bill, promissory note, or other instrument of writing for the payment or forbearance of money, may stipulate therein for interest receivable upon the amount of such bond, bill, note, or other instrument of writing; provided, that no person shall recover in any court more than 12 per cent, interest thereon per annum.” (Comp. Laws of 1885, ch. 51.) In construing this statute, force and effect must be given to both sections, if the same can be done without destroying the effect, intent and object for which they were enacted ; and if such a construction can be given, it ought to be adopted. “It is a uniform rule of construction that one part [757] of a statute should be construed by other parts of the same statute, so that if 'possible no clause or part shall be treated as superfluous, and especially when the two are parts of the same section.” (Judd v. Driver, 1 Kas. 455. Also, see Points v. Jacobia, 12 id. 50; Bridge Co. v. K. P. Rly. Co., 12 id. 409; The State v. Young, 17 id. 414; Comm’rs of Pottawatomie Co. v. Morrall, 19 id. 141; Gardenhire v. Mitchell, 21 id. 88.) Also, what was the object to be attained, and what evils would be remedied by this enactment, must be considered in its construction. Without some statute regulating interest on money, any rate agreed upon may be enforced. The object and intent of the legislature was to restrain and prevent the recovery of interest in excess of some given amount, fixed either by statute or the contract of the parties, and the rule of construction adopted is that when the intent is ascertained, it governs. (The State v. Bancroft, 22 Kas. 170; Intoxicating-Liquor Cases, 25 id. 751.) To give this section the construction contended for by the defendant in error, would give effect to § 1, but would leave § 2 without force. If § 1 is so interpreted, then any verbal contract would be sufficient, upon which interest in excess of 7 per cent, could be collected, but not to exceed 12 per cent.; and if interest can be collected upon a parol contract, what use have we for § 2 ? for it will not be denied that what can be done under a parol contract can be done under a written agreement. Therefore all of § 2 would be useless and superfluous except the proviso thereto. While on the other hand, by giving both sections force — that is to say, construe § 1 so that only 7 per cent, interest can be received, except where the parties agree upon a different rate in excess of 7 per cent, in the manner indicated by § 2. In other words, that the legislature intended to impose a limitation upon the enforcement of all contracts for interest in excess of 7 per cent., unless the parties contracted therefor in writing, and in no case to exceed 12 per cent. This construction is in harmony with the whole chapter on interest. The supreme court of California, under a statute of one section, which in terms substantially uses the same language [758] as is contained in both §§ 1 and 2 of our statute on interest, held that said section meant that all contracts for interest in excess of the legal rate must be in writing. (Smith v. Johnson, 23 Cal. 63.) In most of the other states provisions are made by statute that such contracts, to be enforced, must be in writing. It is therefore held that before a contract cau be enforced for interest in this state in excess of legal interest, such contract must be in writing. It is therefore recommended that the cause be remanded, with an order to the court below to modify the .judgment in conformity to the views herein expressed. By the Court: It is so ordered. Horton, C. J., and Valentine, J., concurring. Johnston, J., dissenting.